JetBlue announces 2011 annual profit

JetBlue Airways Corporation today reported its results for the fourth quarter and full year 2011:

Pre-tax income of $40 million in the fourth quarter. This compares to pre-tax income of $13 million in the year-ago period.

For the full year 2011, JetBlue reported pre-tax income of $145 million. This compares to a pre-tax income of $161 million for the full year 2010.

Net income for the fourth quarter was $23 million, or $0.08 per diluted share. This compares to JetBlue’s fourth quarter 2010 net income of $8 million, or $0.03 per diluted share.

For the full year 2011, JetBlue reported net income of $86 million, or $0.28 per diluted share. This compares to net income of $97 million, or $0.31 per diluted share, for the full year 2010.

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JetBlue ended the year with $1.2 billion in cash and short term investments.

“JetBlue’s solid fourth quarter results capped a very good year for JetBlue,” said Dave Barger, JetBlue’s CEO. “Throughout 2011, we executed on our network strategy in key markets such as Boston and the Caribbean, resulting in record revenue performance. At the same time, we maintained our focus on cost control while running an efficient operation, which helped mitigate the impact of rising fuel prices.”

Operational Performance

JetBlue reported record fourth quarter operating revenues of $1.15 billion. For the full year, operating revenues totaled $4.50 billion, representing an increase of 19.2% over operating revenues of $3.78 billion for the full year 2010.

For the fourth quarter, revenue passenger miles increased 11.0% year-over-year to 7.75 billion on a capacity increase of 10.5%, resulting in a fourth quarter load factor of 82.2%, an increase of 0.3 points year over year.

Yield per passenger mile in the fourth quarter was 13.44 cents, up 11.3% compared to the fourth quarter of 2010. Passenger revenue per available seat mile (PRASM) for the fourth quarter 2011 increased 11.8% year over year to 11.05 cents and operating revenue per available seat mile (RASM) increased 10.5% year over year to 12.16 cents.

“A strong year of double-digit increases in unit revenue is a testament to the hard work of our outstanding crewmembers who deliver the JetBlue Experience every day,” said Robin Hayes, JetBlue’s Chief Commercial Officer.

Operating expenses for the quarter increased 20.4%, or $180 million, over the prior year period, of which $128 million was due to higher fuel costs. JetBlue’s operating expense per available seat mile (CASM) for the fourth quarter increased 9.0% year over year to 11.27 cents. Excluding fuel, CASM decreased 1.5% to 6.85 cents.

Fuel Expense and Hedging

JetBlue continued to hedge fuel to manage price volatility. Specifically, JetBlue hedged approximately 45% of its fuel consumption during the fourth quarter, resulting in a realized fuel price of $3.15 per gallon, a 30% increase over fourth quarter 2010 realized fuel price of $2.42.

JetBlue has hedged approximately 42% of its first quarter projected fuel requirements and 27% of its 2012 projected fuel requirements using a combination of collars, crude call options, and jet fuel swaps. Based on the fuel curve as of January 20, JetBlue expects an average price per gallon of fuel, including the impact of hedges and fuel taxes, of $3.18 in the first quarter and $3.17 for the full year 2012.

Balance Sheet Update

JetBlue ended the year with approximately $1.2 billion in unrestricted cash and short term investments. During the fourth quarter, JetBlue generated approximately $114 million of operating cash flow, made debt payments of $65 million and had capital expenditures of $169 million. For the full year, JetBlue generated operating cash flow of $614 million and had capital expenditures of $524 million, resulting in free cash flow of $90 million.

“Given our focus on disciplined capital spending and sustainable growth, we are pleased to generate positive free cash flow for the third consecutive year,” said Mark Powers, JetBlue’s Treasurer and CFO.

First Quarter and Full Year Outlook

“Looking ahead into 2012, we believe our strong financial foundation, unique product offering and network strategy will result in improved margins year over year,” said Mr. Powers.

For the first quarter of 2012, CASM is expected to increase between 2.0% and 4.0% over the year-ago period. Excluding fuel, CASM in the first quarter is expected to range between a decrease of 0.5% and an increase of 1.5% year over year.

CASM for the full year is expected to increase between 1.5% and 3.5% over full year 2012. Excluding fuel, CASM in 2012 is expected to increase between 2.0% and 5.0% year over year. JetBlue expects approximately two thirds of this year over year increase to be driven by maintenance expense. “While we expect to face significant cost pressures on maintenance expense in 2012 related to the aging of our fleet, we are working diligently to reduce these cost pressures in the future,” said Mr. Powers.

Capacity is expected to increase between 9.5% and 11.5% in the first quarter and to increase between 5.5% and 7.5% for the full year.

JetBlue will conduct a conference call to discuss its quarterly earnings today, January 26, at 9:30 a.m. Eastern Time. A live broadcast of the conference call will be available via the internet at http://investor.jetblue.com .